Posted 9:31 AM by Robert

Misidentifying The Rich II

Don Luskin e-mails to remind me of the significance of "400" to old New York society, and he is right:

Caroline Astor had her heart set on presiding over New York Society, and so she saw to it that her home included an art gallery large enough that it could be turned into a ballroom. As the ballroom could comfortably accommodate 400 guests, the term “Four Hundred” became the sobriquet for New York Society -- with a capital “S”!

See also: “Gala and Glamour: Glittering Parties and Aristocratic Social Life of the Gilded Age...”

Yes, indeed. I think we have now located the central criterion employed by the New York Times to define what it considers a fundamental indicator of social equity: the size of Mrs. Astor's ball room, now demolished and decades ago thoroughly lampooned as irrelevant by Edith Warton.

And, as a bonus, we get a little additional insight into the Times' weird "aristocracy" dig.

Of course, the original IRS study on which the Times is reporting also dwells on this arbitrary "400" number. But since when does the Times simply accept government studies without questioning their significance? For example, would a Department of Agriculture study on the progress against hog cholera warrant a front page story at the Times? Worse, the Times reports that the IRS study was prepared at the urging of Joel Slemrod, a University of Michigan business school professor who serves on an I.R.S. advisory panel and is a leading authority on taxation of high-income Americans with no indication that the Times attempted to determine why Mr. Slemrod "urged" this number or what he believes it's significance to be. But that doesn't deter the Times from presenting the IRS study as evidence of the ongoing formation of a new "aristocracy" and as relevant to current social equity. The IRS study also carries a footnote stating: Prepared under the direction of Michael Parisi and Michael Strudler, economists in the Individual Statistics Branch. The Times article does not even mention the existence of Messrs. Parisi and Strudler, and records no effort to question them as to the significance of the study they prepared and the choice of its underlying paramenters (including the "400" number).

If the Times is to plead that it merely accepted the IRS number, what is to be made of other aspects of the IRS report that the Times chooses to modify? For example, the Times reports only that only a handful of taxpayers showed up in the top 400 every year, but the IRS report goes much further in stressing that there is little overlap among the 400 even between any two specific years: Of the taxpayers who appear in this group of 3,600 returns, less than 25 percent appear more than once, and less than 13 percent appear more than twice. Does that read like the formation of an "aristocracy"?

For all that, Don Luskin correctly points out that this article is still progress for the Times - especially the link to the underlying IRS report.

But it is surely some kind of high journalistic crime for the Times not to have at least attempted to question and quote any of Joel Slemrod, Michael Parisi or Michael Strudler.

UPDATE: Responding to my e-mailed enquiry, Joel Slemrod writes:

There is nothing magical about the 400 number. What I requested that the IRS do is update an earlier study they had done (in the spring of 2001) that presented data on the highest-income 400 taxpayers from 1992 to 1998. By the way, David Cay Johnston did attempt to contact me while he was writing the article, but I was out of town.